Ending a Major Acquisition: The Price of Clarity

The context, in plain terms

On September 15, 2022, Adobe and Figma had announced their intention to merge, a deal estimated at approximately $20 billion. This project aimed to integrate the leader in collaborative design, Figma, within the creative software giant, Adobe.

However, on December 18, 2023, the two companies mutually agreed to terminate the merger agreement. This decision came after they concluded there was no clear path to obtaining the necessary regulatory approvals from the European Commission and the UK's Competition and Markets Authority.

That day, it was reported that Adobe would pay Figma a $1 billion break fee. Adobe confirmed in its own press release that the termination agreement resolved all outstanding issues of the transaction, including this fee. Publicly, the full contractual mechanisms of this fee are not entirely visible, and nothing indicates a possible reversal or reopening of the transaction to date.

A Billion for Freedom?

The announcement of December 18 is read in two distinct ways by the simulated panel. For Adobe investors, it is the cost of a failure, a billion dollars spent with no direct return on investment. For others, notably some Figma customers and employees, it is the price of preserved independence, the end of an uncertainty that weighed on the platform's future.

Before a panel of simulated voices, the decision receives a divided response. About half of the voices oppose it, about one in four express doubt, and about one in three support this termination. The group of Adobe and Figma employees, as well as management bodies, receives the decision less favorably than customers or business partners.

For teams, this decision raises questions about future direction and projects that were to stem from the integration, thus protecting their professional stability and company vision. A decision to terminate is also a decision to restart.

The Shadow of Doubt on Future Execution

Doubt about execution is the primary concern. The termination of the acquisition, though motivated by regulatory hurdles, raises questions about Adobe's ability to pivot quickly and effectively toward a new growth strategy. Objections do not focus so much on the principle of termination as on how Adobe will use the freed resources, and how the company will compensate for Figma's absence in its portfolio.

On this point, The Cost of Clarity is missing: one can approve the end of regulatory complexity and not believe that Adobe will immediately know how to leverage this new situation to define a clear and mobilizing path. The market and teams expect a concrete roadmap, not just the end of a chapter. The price of termination is that of the new direction.

The Victory of Free Users

Amidst the divided responses, one voice stands out, that of a Design Educator, declaring support for the termination, while many customers and users express doubt. He states: “Adobe’s influence would’ve killed Figma’s accessibility for students, now we can keep teaching it without corporate strings attached.” This perspective highlights a strong user expectation: the preservation of Figma's independence and accessibility.

This position contrasts with an Adobe Shareholder who opposed it, believing that “A billion dollars for a failed deal is a reckless use of capital, Adobe’s M&A strategy needs a hard reset.” A Figma Early Investor, for his part, sees the break fee as a win for early backers, despite the execution challenges without the founders.

We ran the exercise three times: same answer. This highlights the persistence of these concerns. The freedom of a product is also a value for its users.

After the Termination, the New Roadmap

Now that the decision is public, the first follow-up action for a leader is to communicate a clear vision of the post-termination strategy. This means reassuring teams about the future, explaining how the company intends to innovate and grow without the acquisition, and justifying the fee paid as an investment in strategic clarity.

Adobe indeed resolved all outstanding issues of the transaction that day, thus turning the page on this chapter. However, this case does not state what Adobe did publicly to articulate its new growth strategy after this announcement.

Leaders must transform what could be perceived as a failure into an opportunity for strategic reaffirmation, demonstrating that The Cost of Clarity is not a wasted expense, but the price of a renewed direction. The end of one ambition opens the way to another.

The questions readers ask

Related cases